World Currency Watch
The Roadmap to
A Complete Forex Mastery Course
The Quick Start Guide
to Earning Profits
like the Pros
World Currency Watch
98 S.E. 6th Avenue, Suite 2, Delray Beach, FL 33483 USA
USA Toll Free: (888) 358-8125
Copyright © 2010 by World Currency Watch. All international and domestic rights reserved. No part of this publication
may be reproduced in any form, printed or electronic, without prior written permission from the publisher, World Currency
Notice: This publication is designed to provide accurate and authoritative information in regard to the subject mat-
ter covered. It is sold and distributed with the understanding that the authors, publisher and sellers, are not engaged in
rendering legal, accounting, or other professional advice or service. If legal or other expert assistance is required, the
services of a competent, professional advisor should be sought.
The information and recommendations contained in this brochure have been compiled from sources considered reli-
able. Employees, officers, and directors of World Currency Watch do not receive fees or commissions for recommenda-
tions of services or products in this course, with the notable exception of EverBank® products. World Currency Watch
has an advertising relationship with EverBank, and therefore may receive fees should you decide to invest in any of their
products. Investment and other recommendations carry inherent risks. As no investment recommendation can be guar-
anteed, the Sovereign Society takes no responsibility for any loss or inconvenience if one chooses to accept them.
All information and statements contained in this publication are not to be considered by the reader as personalized
investment advice. The authors and agents of World Currency Watch are not licensed under U.S. or other securities laws
to address particular investment situations and nothing herein should be deemed as personalized investment advice.
Table of Contents
The Road Map to Currency Riches
A Complete Forex Mastery Course
How to use this Guide — Welcome Letter ..............................................................................4
Five Recommendations for Getting Started Today.................................................................5
Five Recommendations for Mastering Market Fundamentals ..............................................9
Five Recommendations for Mastering Technical Analysis ...................................................11
Five Recommendations for Mastering CD and ETF Investments .......................................15
Five “Quick Tips” to Mastering Options ................................................................................18
Five Recommendations for Mastering Spot Forex and Futures ..........................................21
Guru Biographies ...................................................................................................................23
I’m just a small-town guy from Camden, Arkansas. If you’re at all like me, then you
can recognize a valuable opportunity when you see it.
Almost 10 years ago, I saw the opportunity to change my life by switching from
regular hum-drum stocks to the fast-moving, profitable Forex market.
And it’s important that you know…
I can’t support my family using amateur trading tactics. I can only afford to use
what has been proven to work. I want to teach you these proven tactics so you can
do the same for yourself and your family.
I’m not going to promise you the world, but imagine for a moment how great it
would feel to start accomplishing your financial goals this year.
You will already gain an edge in this market just by watching the course; but our
goal is more than just to build awareness about this market. Our goal is to build your
skills to master the process.
This guide helps you take the next step to profits by providing you with recom-
mendations from myself, Evaldo Albuquerque, and Kat Von Rohr on how to quickly
get started mastering Forex like the pros.
I hope that you find each of the recommendations of value. While we cover all of
these topics in depth throughout the course, we want to provide you with some
great tips that you can put to immediate use.
Sean Hyman, Investment Director
World Currency Watch
Five Recommendations for Getting Started Today
By Sean Hyman
When I first moved from regular stock trading to the Forex market, I really didn’t know
where to begin. It was a new market to me. It may very well be that way for you too.
That’s why I want to begin this guide by pointing you in the right direction, so you can
quickly be on your way to mastering Forex. Let’s get started!
1. Choose an FX Broker.
To trade in the Forex market, you need a special FX account with an FX dealer. Fortu-
nately, it’s much easier to establish one now, than just a few years ago.
When I first started in the Forex market, there were over 30 FX brokers to choose from.
As you can imagine, with all those to choose from, it was difficult to select the correct
one for my needs. Fortunately, there are not as many today. Only about one third of
those brokers remain.
Over the years, the requirements for maintaining an FX brokerage firm have gotten
tougher. As a result, many firms closed their doors because they could not meet the
new requirements. This is good news for you. It means the brokers with weaker balance
sheets have been filtered out.
Even still, it’s best to choose an FX broker that must adhere to the strictest of regula-
tions. These regulations are for your protection. These regulations force FX firms to set
aside the most cash and lower the operating risk to the firm. This makes it safer for you,
the account holder too.
For more details about how to choose a broker, please be sure to see your companion
workbook. In the meantime, here are a few brokers who can help you get started in your
Online Retail Forex Firms:
FXCM (Forex Capital Markets):
(888) 503-6739 or email: firstname.lastname@example.org or email@example.com
32 Old Slip, 10th Floor
New York, NY 10005
DBFX: Deutsche Bank
(888) 363-3239 or email: firstname.lastname@example.org
Winchester House 1 Great Winchester Street
London, EC2N 2DB www.dbfx.com
(212) 858-7690 or email: email@example.com
140 Broadway, 46th Floor
New York, NY 10005
Full Service Firms:
Mirus FX TradeAssist
Specialty: Forex, Currency Futures, and Currency Futures Options
(800) 496-1683 x2244 or email: firstname.lastname@example.org, email@example.com
444 N Wells St, Suite 502
Chicago, IL 60610
MF Global Inc
Specialty: Forex, Currency Futures, and Currency Futures Options
The Chicago Board of Trade
141 W Jackson, Suite 1800-A
Chicago, IL 60605 www.mfglobal.com
Foremost Trading LLC
Specialty: Forex trading services, trading lots $10,000 - $1 million and up (even in exotic
(888) 613-6739 (888-61-FOREX) or International: (630) 463-4511
Contact: Bob Bunn
28 N. Bennett St.
Geneva, IL 60134Website: www.foremosttrading.com
Specialty: Equity and Index options, World Currency Options, Forex, Currency Futures,
and Currency Futures Options (866) 839-1100 Ext 6810
600 W. Chicago Ave, Suite 100
Chicago IL 60657www.thinkorswim.com
These are just some of the top brokers that are all well regulated and well capitalized.
You can have your account denominated in U.S. dollars or many other common foreign
currencies with them. You can also have your account domiciled in one of several coun-
tries with these brokers. They offer a lot of flexibility for you because they have a global
Next, you will want to decide what type of account you want to open with them: either a
micro account or a mini account.
2. Consider which type of account you want to open.
When considering the type of account that you want to open, you’ll want to understand
the differences between them. In short, choosing either a micro or mini account deter-
mines how much leverage you will use on each trade. Said another way, it determines how
many units of currency you are trading per position.
A micro account trades in lot sizes of 1,000 units of currency per lot (also known as 1k
lots). That means for each increment of movement that your currency pair moves (either up
or down), your micro lot trade will gain or lose roughly 10 cents at a time.
The other main type of account that you can open is a mini account (or what some refer
to as a “standard mini” account). Mini accounts trade in 10,000 units per lot (also known
as 10k lots). Each increment of movement that mini lot trades move causes you to gain or
lose roughly $1. So this type of account has 10 times the impact in comparison to the 1k
So, for many newer traders, the micro account may be the best place to start. With
that said, there is one notable advantage to holding a mini account with some of these
brokers. Certain brokers only give phone support to their mini account clients and the
micro account holders must use email, forum boards, etc. to access their customer
You might want to consider starting off with a micro account if you have $5,000 or less in
your account and a mini account if you have $5,000-$10,000 or more in your account.
3. Lots to trade.
When you first start trading, no matter how much capital you have in your account, you
may want to start off by trading one lot. If it’s a micro account, that will be one micro lot (1k
lot). If it’s a mini account, that will be one mini lot (10k lot).
When you’re first starting out, you may want to “trade light” until you get the hang of
it. That way, if you have losing trades, these losers will have less of an impact to your
account than trading multiple lots. In other words, the number of lots that you trade
causes a “multiplier effect” to your account. If you place several winning trades in a
row, then this can be a good thing. But if you place any losing trades, it can compound
your losses. You need to think about these potential losses ahead of time, because it’s
the losses that will hurt your account. Winning trades will take care of themselves, but
losses have to be managed.
Again, start out by trading only one lot and focus on trading only one position (one pair)
at a time. Then once you’re acclimated to trading Forex, you can move on to trading mul-
tiple lots or multiple pairs once you feel that you are comfortable.
Now let’s talk about what pairs to start off focusing on…
4. Good currency pairs to start with.
All currency pairs are not created equal. In other words, some pairs can surprise quick-
er than others. Here’s why. They have various volatility levels. Just like Google’s stock
(GOOG) will be more volatile than that of General Electric (GE), certain currency pairs are
this way as well.
I know it sounds exciting to dig into the pairs that move 200-300 pips a day, but imagine
if you’re on the wrong side of the trade…would you rather lose 50 pips or 300 pips a day?
Of course the lower the loss, the better it is on your account.
So, start out with these lower volatility pairs: EUR/USD, AUD/USD, USD/JPY, USD/CAD,
NZD/USD and USD/CHF.
You may want to avoid higher volatility pairs like the GBP/USD at first or seek profession-
al trading advice to trade them.
5. Why you should get started today.
The Forex market is very unique. It stands apart from any other market. Let me share with
you some of the unique aspects about this market.
• This market trades 24 hours a day, Sunday evening through Friday evening. The U.S.
stock market only trades 6 ½ hours a day.
• The volume in the spot Forex market is enormous. It trades about $4 trillion a day which
is more than all of the stock markets around the world combined.
• Your costs are lower. Since the Forex market is the most liquid market in the world, it’s
no surprise that it has very narrow spreads between the buy and sell quotes. Therefore,
you have less ground to make up to earn a profit. Also, there are no commissions in this
market. We call FX dealers “brokers” but that’s just a generic term. In reality, they are
not brokers at all, but market makers. They allow you to directly enter the market (and
not through a broker). By doing so, you are able to avoid the broker fees. Instead you
just pay the spread to FX dealers for their services.
• Huge leverage is available. While I never suggest you use all of the leverage available
to you, you still have the ability to leverage quite a bit. For instance, with most brokers,
you can leverage 50 to 1. In stocks, most stock traders will trade on 2 to 1 leverage at a
• You can earn interest daily. In the FOREX market, you can gain or be charged daily
rollover interest, depending on whether you’ve bought the higher yielding currency in
the pair or not. It’s possible to earn daily interest (rather than quarterly interest in many
I encourage you to continue reading this guide for specific “quick start” recommenda-
tions from our editors. I hope my recommendations above have helped you get up and
running quickly so you can start profiting in this incredible market.
Five Recommendations for Mastering Market Fundamentals
By Evaldo Albuquerque
Plenty of ForexForex traders choose which currencies to buy and sell based on certain
fundamentals. These “fundamentals” are simply economic or market data that give traders
clues about currencies.
Personally, I watch both fundamentals and technicals to select my next Forex trades.
However, if you’re just getting started out in the Forex market, here are a few tips on how
you can begin to master the fundamental side of trading.
1. Keep an eye on interest rates.
Out of all the economic factors that affect the performance of currencies, a country’s inter-
est rates are at the top of the list. Typically, if a country raises its interest rates, its currency
will strengthen. That happens because a higher interest rate gives traders a higher yield on
their trades. As such, traders will move their assets to that country to gain higher returns.
When a central bank cuts interest rates, the opposite happens. Usually traders take their
assets from that country, and it weakens that country’s currency. So, it’s important to follow
announcements from central bankers and officers because they are the ones setting mon-
etary policies. These interest rate changes will have a bigger impact on the currency markets
when the market does not expect a policy change. That’s why you need to stay ahead of the
curve by developing your own expectation, based on other economic indicators.
2. Watch the employment situation.
Another very important piece of economic data is the country’s employment. When pay-
roll employment decreases, it’s considered a sign of weak economic activity. Central banks
tend to respond by lowering interest rates to stimulate economic activity. As mentioned
before, lower interest rates tend to have a negative impact on the currency. On the other
hand, if hiring activity picks up speed, central banks may want to raise interest rates, to
cool down the economy. After all, overheating economies can lead to unintended conse-
quences, such as inflation and asset bubbles.
3. Keep in mind, inflation is actually good for currencies.
Most central banks view price stability as their primary goal. As such, they try to set in-
terest rates according to the level of inflation. When inflation is rising beyond what authori-
ties deem acceptable, central banks tend to raise interest rates to cool the economy and
bring prices down. Higher interest rates tend to lead to a stronger currency. That’s why is
important to watch the level of prices in the overall economy.
4. Keep track of other important economic data.
When you’re trading currencies, you’re actually trading whole economies. That’s why
there are numerous indicators that affect the currency market. Besides the indicators
mentioned above, it’s also important to follow things like the trade balance. A country has
a significant trade balance deficit when its imports are greater than exports. Any country
with such a trade balance deficit, will generally have a weak currency because traders
will see it as a sign to sell. There are lots of other fundamental indicators available on the
Internet. Visit Bloomberg Economic Calendar at www.bloomberg.com/markets/economic-
calendar/ for a glimpse into upcoming economic data releases. Another good source of
free economic indicators is www.tradingeconomics.com.
5. Stay on top of correlations between currencies and other assets.
Some currencies, under normal circumstances, tend to move in the same direction of
other assets. For example, Canada is one of the biggest oil exporters in the world. So the
Canadian dollar tends to follow the price of oil. Similarly, the Mexican government is highly
dependent on oil exports for revenue, so the peso also has a strong correlation with oil.
Such correlations are important because you can use movements on oil prices to guide
your Forex trading in these currencies. For example, if you believe forces of supply and
demand will lead to a higher oil price, you could buy the Canadian dollar or the Mexican
Five Recommendations for Mastering Technical Analysis
By Sean Hyman
Usually, traders study fundamentals, technical, or both to guide their Forex trading. We
just covered fundamentals in the previous section. Technicals include any analysis that can
be garnered from currency charts. As a new FOREX trader, here are a few guidelines to
help you start your own technical analysis.
1. Choosing a good charting package is simpler than you think.
To be a technical trader, you really need a good charting package, so you can view vari-
ous currency pairs’ charts. The good news is, charting packages are fairly easy to secure.
These days, most Forex brokers have their own free, real-time charting package that has
every major indicator on it that you will ever need in your trading. Compare that to stocks.
Your stock broker is not likely to offer you free, real-time streaming quotes & stock charts
to help you in your trading, but your Forex broker does.
However, let’s say that you don’t like the ones that your broker has for you to use. You
still don’t have to go pay $100 to $200 a month for a comprehensive charting package. For
instance, you can go to www.netdania.com and find three or four different free, real-time
charting packages that have all the most common “bells and whistles” that technical trad-
ers ever need. So, don’t pay for a charting package. Check out your broker’s charts and
other free charts and places like Net Dania and see what you like the best.
Note: Don’t choose your broker by the charting package that they offer. Always choose a broker that is
among the best capitalized and most well regulated in the industry. Then if necessary, you can get free charts
from other places.
2. Don’t use too many indicators on your charts at once.
It is possible to put too many indicators on your charts and then you will end up con-
fusing yourself. Traders call this “analysis paralysis.” In other words, too many things are
pointing you in too many directions, and you don’t have any more clarity than when you
Instead, place only one to three indicators on your chart, at a maximum. This will ac-
complish two goals: First, it will keep things as simple as possible to avoid confusion.
Also, it will keep the most important thing (the actual price chart) large enough so you
can see the currency trends more easily. The more space your indicators take up on your
charts, the smaller the price moves will appear and you won’t be able to identify the
trend direction as easily.
Also when you view a chart, look further back in time. For instance, on a one hour or four
hour chart, look back at least 30-40 days to determine a currency pair’s direction. On a
daily chart, look back at least a year. The more data you can see, the more clarity you will
have. It will be easier to spot the trends than if you view too little data.
3. Trend detection on training wheels.
Remember when you were first learning how to ride a bike? You probably started off with
training wheels, and then later mastered riding your bike without them. Well, in the same
way, the best way to start off detecting trends is to start with training wheels.
For technicals, “training wheels” is an indicator called the Simple Moving Average. Put in
the number 50 for a medium-term trend detection or put in the number 200 for a long-term
trend detection. (I use the 50-period SMA mostly and I detect the main medium-term trend
by watching this indicator on the daily chart.)
Once this indicator is on your chart, look to the right side of your chart where the most
recent data is being displayed. Is the moving average pointing higher or lower? If it’s slop-
ing higher, then you have an uptrend on the chart. If it’s sloping lower, then you have a
downtrend on the chart. Remember to trade in the direction of the trend and never against
it. The trend is your edge! Check out an example of a downtrend on the chart below.
The 50-Day Simple Moving Average
Confirms the Trend Is Downward
4. Interpret the indicators in light of the overall trend’s direction.
Your indicators will give you both buy and sell signals. However, the currency trend’s
direction trumps everything. So only take buy or sell signals that complement that trend.
If the overall trend is upward on your chart, you will want to focus on buy signals for your
entry and ignore the sell signals. If the overall trend is downward, you’ll want to take the
sell signals and ignore the buy ones. In other words, don’t sell short just because there is
a sell signal, or buy because there is a buy signal. Make sure the currency trend is going in
your favor first.
5. The spoils go to the technical traders that manage their risks the best!
Even using the best technical analysis tools in existence, you still need to manage the
risk to your account by keeping the “percent of account at risk” down to 5% or lower. (The
lower the better.)
Always ensure that “the math” is working in your favor and not against you!
Of course, the sexy part of Forex trading is getting the trend’s direction right and then
picking an incredible entry point. However, the boring part is what’s going to keep your ac-
count afloat through “thick and thin” times.
It’s the risk management side of the equation.
Before you place a trade, first run the numbers. In other words, figure out where you
would place your stop-loss order. It should be placed beyond a crucial support or resis-
tance area. But that’s not all.
From there, you’d want to consider how big your loss would be if you were to be stopped
out. So you see how many pips the loss would be and then you multiply that by your “pip
cost.” (Most trading stations automatically calculate the pip cost for you.)
Once you do that, you’ll know how many dollars you would lose on the trade (per lot
traded). Take that “dollar loss” number and divide that into your account balance. See
what percentage that is. That number should not be above 5% of your account balance.
If the loss would be anything above 5%, then reduce the number of lots first. If that still
doesn’t do it (and it usually does), then narrow your stop loss level a bit.
Remember, the number of lots that you choose to trade (and NOT the width of your stop),
is going to be your BIGGEST determining factor when it comes to the size of your losses.
The number of lots has a “multiplier” effect upon your loss, and the width of your stop
has a “subtraction” effect on your account. So while both are important, consider the num-
ber of lots first, and most often. The biggest mistake is to trade too many lots rather than
too few. So when in doubt, ratchet down the number of lots that you’re trading.
The way you should think about your strategy
Remember, in trading, all indicators aren’t perfect. They simply give you a statistical edge
over time. Therefore, EVERY trader will have strings of losses and strings of winners. When
managing your risk, you don’t have to worry about winners; they take care of themselves,
but you need to manage your losers and keep them in check.
Therefore, you have to assume that your strategy will occasionally give you two to three
losers “back to back.” If this were to happen, how big of a hole would you dig (percentage
wise) in your account? If it’s 5%, 10% or maybe even 15%, that’s manageable and recover-
But, if it goes to 30%, 40%, 50%, etc. most traders won’t be able to recover that. After
all, if you lose 50% of your account, you have to gain 100% from that point in order to get
back to breakeven. So the math works against you, when you dig a deeper hole for your-
You are the one that determines how deep those losses will be (not the market). You
determine that, by the width of your stop loss and most importantly, by how many lots you
choose to trade. The lower the percentage of your account that could be lost on a “per
trade” basis, the better.
Most pros get the “percent of account at risk” down to anywhere from ½ of 1% up to 2%,
but rarely higher. So, make sure you trade small, relative to the size of your account, by
figuring out what the percent lost would be to your account balance. That’s how to make
the math work in your favor. This is where most traders get it wrong.
I hope you’ve found these five technical analysis trading tips to be helpful. If you master
these basic rules, you’ll be light years ahead of many traders out there.
Five Recommendations for Mastering CD and ETF Investments
By Kat Von Rohr
So far, in this quick-start guide, you have been hearing trading tips for when you open
your own trading account and start buying and selling currencies in the Forex market.
However, in this mastery program, my focus is on the long-term currency investments you
can use to hedge your overall stock portfolio against the sinking dollar.
If you are one of the hundreds of millions of Americans who has their entire life savings
(and all other assets) denominated in dollars, here are a few long-term recommendations
you can use to start diversifying your assets immediately into stronger foreign currencies.
1. The All Weather Portfolio.
Back in 2007, the editors at The Sovereign Society joined forces with EverBank to create
a one-stop shop currency investment solution. It’s called the “All-Weather Portfolio.”
By buying this one portfolio, you gain instant exposure to the Norwegian kroner, Swiss
franc, Canadian dollar, Japanese yen, Singapore dollar and Chinese yuan. Plus, you get the
strength and safety of the world’s original currency, gold.
That’s why it’s called the “All Weather Portfolio.” It’s specifically designed to hold its own
during both bear and bull markets.
Now if you invested in all these items separately at EverBank, you would pay a minimum
of $42,500 for every Access Deposit Account, CD and pooled gold account in this portfo-
lio. But by investing in this one-stop investment solution, EverBank offers a lower minimum
Best of all, everything in this portfolio (with the notable exception of gold) is FDIC in-
sured, so you’re protected from a bank failure. That’s important considering the FDIC
seized 140 banks in 2009 and another 104 in 2010, so it’s always good to protect your bank
To learn more you can visit http://www.everbank.com/allweather.
2. A Japanese yen ETF.
Everyone needs some portfolio insurance, and the Japanese yen is one of the best cur-
rencies you can add to your portfolio, for that very purpose. The Japanese yen tends to
rise as stocks plummet and vice versa. That’s why the Japanese yen can help protect your
stock or retirement portfolio if stocks tumble.
Japanese yen ETFs make it as simple as ever to buy the Japanese yen, with that very
stock account you’re trying to protect.
The Japanese yen is the third most liquid currency in the world, and several ETF provid-
ers give you direct exposure. These include:
• CurrencyShares Japanese yen Currency Trust (NYSE: FXY)
• WisdomTree Dreyfus Japanese yen Fund (NYSE: JYF)
The difference between the two is, the CurrencyShares Japanese yen trust holds the
physical currency, whereas the WisdomTree Japanese yen ETF tracks the price of time
deposits, repurchase agreements and Japanese bonds. In other words, it tracks several
items that mimic the Japanese yen’s price.
As an investor, your result is likely to be similar no matter which you buy. So they’re both
If you’re a bit gutsier, you can go for an “ultra” yen ETF that tracks double the perfor-
mance of the Japanese yen like:
• ProShares Ultra Yen ETF (NYSE: YCL)
But a word of caution: This ETF uses leverage which means that it can move fast. So if
you go this route, be sure to watch it carefully.
3. CurrencyShares Swiss Franc Trust (NYSE: FXF).
The Swiss franc also falls into the “portfolio insurance” category. For years, the Swiss
franc has risen when stocks have dropped significantly. The reason is that professional
traders still view the conservative Swiss franc as a “flight to safety” currency. So, every
time there’s a hint of trouble in the markets, traders run for this traditional low-yielding cur-
Also, from a fundamental perspective, Switzerland has everything you could want in a
currency. The country has low unemployment, a miniscule budget deficit, thriving business
environment and a government that doesn’t print money as freely as the U.S. does.
To demonstrate the Swiss franc’s strength: Between 2009 and 2010, the Swiss National
Bank intervened in the markets to try to push down the Swiss franc’s incredible strength.
The central bank started buying up euros and selling francs to artificially manipulate the
Swiss franc’s price.
In short, these bankers failed. The market wanted the Swiss franc to rise in price, so the
Swiss franc got stronger.
The easiest way to buy the Swiss franc is with an ETF, like:
• CurrencyShares Swiss franc trust (NYSE: FXF).
4. PowerShares DB G-10 Currency Harvest Fund (NYSE: DBV).
The PowerShares DB G-10 Currency Harvest Fund is an interesting fund to hold over the
long run. At any given time, this fund invests in six different currencies; it buys the three
highest yielding currencies, and sells the three lowest yielding currencies.
If you’ve heard of a “carry trade,” this fund essentially mimics that strategy.
It’s a suitable fund to buy in a “growth environment” just as central bankers are about to
raise rates, because you can capitalize on these interest rate moves. I also like it because
it’s the only fund on earth that invests in one of the strongest long-term currencies to hold,
the Norwegian kroner. (One of the last remaining currencies on earth from a country with
A word of caution though: This fund will not protect your stock portfolio from a coming
bear market. The reason is any stock sell-off generally pushes all traders into low-yielding
“safe haven” currencies. That means, the very currencies this fund bets against, will rise.
But I still recommend it because it’s a good way to diversify your portfolio into several
foreign currencies at once, with a single ETF.
5. EverBank Asian Currency Portfolio
Everyone I know in the currency world says that Asia is the next superpower, and all the
currencies from this region will be on all traders’ buy lists in a couple of years. So for the
long-term investor, investing in several Asian currencies through a single currency portfolio
can be extremely beneficial.
The EverBank Asian portfolio gives you instant exposure to several of these up-and-com-
ing global powers including India, Singapore and China. It also gives you exposure to the
c ountry that benefits from China’s growth story, Australia, and the other big-name Asian
country in the region, Japan.
Again, like the All-Weather Portfolio, the minimum for this portfolio is $10,000. For that,
you gain instant diversification into the Aussie dollar, Singapore dollar, Chinese yuan, Japa-
nese yen, and Indian rupee.
Also, like the All-Weather Portfolio, this portfolio is FDIC-insured so you’re protected from
any bank failure (not likely given EverBank’s track record, but helpful).
To learn more you can visit http://www.everbank.com/asiancurrency.
NOTE: As I mentioned in the currency course, our publisher, World Currency Watch, has an advertising
relationship with EverBank, so we may receive fees if you choose to invest in their products. Honestly, I’d
recommend them anyway because they are the only bank that offers these kinds of solutions, at reasonable
minimum rates, so individual investors can take advantage of these currency plays.
Again, these are just a few ideas to get you started. If you decide to invest in any of these
ETFs, be sure to set at least a 20% stop-loss to protect your portfolio, just in case. Also, if
you invest in any of the portfolios, read your statements each quarter to gain perspective
on how your investments are faring.
Also, keep in mind, that there are new currency ETFs and CDs being introduced every
year, so there will be plenty more opportunities to bet against the dollar for the long-term.
The important thing to remember, is any of these instruments can contribute to the overall
goal to diversify a portion of your overall portfolio outside the dollar.
Five “Quick Tips” to Mastering Options
By Sean Hyman & Kat Von Rohr
Throughout this mastery program, we have covered not just long-term currency investing
and Forex trading, but also intermediate-term trading with currency options. To get started
in currency options, we recommend the following actions.
1. Options MAY NOT move perfectly with the underlying currency. The option’s
price is also a function of volatility and time erosion. To lessen the “time erosion,”
we recommend buying “in the money” options.
To recognize “in the money” options, you need to be familiar with the three types of op-
tions pricing. …
• At-the-money: An option is “at-the-money” if the option’s strike price equals the mar-
ket price of the underlying currency.
• In-the-money: A call option is “in-the-money” when the call option’s strike price is
below the market price of the underlying currency. For a put, it’s when the strike
price is above the market price of the underlying currency.
• Out-of-the-money: A call option is “out-of-the-money” when a call option’s strike
price is higher than the market price of the underlying currency. For a put, it’s when
the strike price is below the market price of the underlying currency.
In options, you’re always in a race against the clock, because the second you buy an op-
tion, it can start losing value, based on when the option expires. It’s called “time erosion”
and you must constantly monitor your time erosion when buying options.
That’s why we believe that in-the-money options give you the best opportunity to profit
because time erosion has LESS of an effect on the option’s price. As the in-the-money op-
tion’s expiration date nears, the price won’t be as influenced by the ticking clock.
Also finding an “in-the-money” option is fairly simple:
For example, let’s say you believe the Australian dollar will rise in a few months. You
check the price and see the AUD/USD is trading at .90. Options trade in multipliers of 100,
so any Australian dollar call option with a strike price less than 90 would be “in-the-mon-
ey.” So, an 87 Australian dollar call option would be three points “in the money.”
If you predicted that the Australian dollar will fall, you would want a put option that’s
more than 90, so you’re buying an Australian dollar option that is “in-the-money.” A 93
Australian dollar put option would be three points in the money, if the market price of the
Australian dollar was at .90.
2. Puts tend to gain in value faster than calls, so puts CAN give you a bigger per-
centage gain over calls.
Now, we love call options, but overall currencies simply fall faster than they rise. It’s simi-
lar to stocks; stocks always sell-off faster than they climb. Think of it as climbing a moun-
tain. Climbing that mountain is going to take much longer, than falling off of it.
That’s why buying puts can be more advantageous than buying calls, in certain market
environments. So if you’re just getting started, look for a huge sell-off coming in a specific
currency. Then buy the put ONCE the currency has reversed its uptrend. If you can time it
correctly with in-the-money puts, you can turn a nice profit.
3. Always trade with the trend.
Currencies trend even better than stocks. They start down one path and they stick with it
for several months overall.
Need an example? Think of how the euro continued to fall for months after the sovereign
debt crisis hit the news in early 2010. Or, how the Australian dollar recovered right along
with stocks, and mostly rose from roughly March 2009 — April 2010.
So when trading currency options, always, always, always trade with the trend. Even
when you’re buying puts, wait for confirmation that a trend is turning before diving in. Re-
member it’s always better to be right, than to pick a perfect top or bottom.
Also, if you already own a currency option and you see the trend changing, make sure
you close out your option and take your profit while you can.
4. When choosing options, you need to use BOTH fundamental and technical
analysis. Both are important!
Some fundamentalists will tell you that you can learn everything you need to know about
a currency, just by looking at the country’s data. Then there are “chart guys” who say you
can learn everything you need to know, just by looking at the charts.
Well in currency options, it’s best to use BOTH fundamentals and technical analysis.
Start by using fundamental analysis to choose which currency looks the most promising
to invest in (either on the long or short side). That will determine the currency, and whether
you’re looking at puts or calls.
Once you have your currency that promises to rise (or fall), start checking out that cur-
rency’s chart. Or, if you have several possibilities, look at several pairs’ charts. Are there
any technical set-ups coming that tell you how far the currency might rise or fall? That will
influence which strike price you choose.
Also, how long does this current trend look to run based on its charts? That will affect
what month of expiration you choose for your option.
Finally, charts can also give you the best entry point possible.
5. Long-dated options are statistically more likely to turn out in your favor than
near-term dated options.
All options that you buy are in a race against the clock. So when an option is close to
expiring, it is definitely NOT the time to buy.
Buying a short-dated option is like buying an old, “junker” car that only has a few thou-
sand miles left to run. Sure it’s cheap, but you also get what you pay for. Soon it will be
worthless, so that old junker option is not likely to get you where you want to go. Also, the
ride will be volatile and bumpy the whole way there.
On the other hand, long-dated options give you more time for your currency option pre-
diction to play out. The long-dated option is more like a used car in good condition. It’s
a bit more expensive, but it’s the better alternative that’s less likely to break down on the
highway. That makes long-dated options a better, less volatile way to play the currency op-
tions market. Also, statistically it’s more likely to profit.
BONUS: Liquidity, liquidity, liquidity.
Currency options are still gaining in popularity, so there are not always tons of buyers and
sellers for every strike price. So when you’re buying, be sure to check the number of “open
contracts” (also referred to as the “open interest.”) This tells you how much liquidity a cer-
tain currency option has. In general, the more liquidity (higher number of contracts open)
the better, because there will be a buyer when you’re ready to sell.
Five Recommendations for Mastering Spot Forex and Futures
By Sean Hyman
To close out this Quick-Start Guide, let’s take a quick look at the easiest ways to negoti-
ate the two most leveraged currency instruments: currency pairs in the Forex market, and
currency futures. Here are my quick recommendations to get you started.
1. Starting Account Balance Sizes.
In a micro account, I’d encourage you to start off with at least $500 minimally. If you’re
starting off with a mini account, I’d encourage you to start with at least $5,000. Starting
with anything smaller than these amounts forces you to risk too much of your account
(percentage wise) even if you are only trading a single lot.
2. Trade with a “no dealing desk broker” as opposed to a “dealing desk broker.”
“Dealing desk brokers” take the other side of the trade as their clients. In other words,
they bet against you. Your losses are literally their gains, so they have an incentive for you
to lose. That’s why I advise you to choose a “no dealing desk broker” who doesn’t engage
in such practices. All you have to do is ask your broker which type he/she is. This removes
the potential conflict.
3. Start Small.
Many traders try to start out trading too much leverage at one time. That means that
they start off trading multiple lots. In the beginning, start trading one micro lot in a micro
account OR if you have a mini account, one mini lot. But don’t start out trading multiple
lots. Once you’ve successfully traded one lot for a period of time, then you can move on to
trading multiple lots as your account balance builds.
4. Always use stop losses.
If you don’t use a stop, you’re saying that you are willing to risk 100% of your capital
on each trade. So be sure to use one with EVERY order. Don’t set your stops too closely
either. Typically, you’ll want your stops at least 50 pips or more away from your entry point.
(Remember, that the biggest way that you control the risk of loss is through the number of
lots that you choose to trade…and not as much in the stop distance. So, better to choose
fewer lots and a wider stop, than to choose more lots with a closer stop.)
5. Trade when the market is moving the most.
Typically, currencies move the most in European and U.S. trading sessions. The European
session begins around 3am EST and ends around 12 noon EST. The U.S. session begins
around 8am EST and ends around 5pm EST. I’d suggest starting off trading anywhere between
the hours of 3am EST and 12 noon EST. This is when the volume is generally the highest and
the spread costs tend to be the lowest. The pairs will trend more during these sessions. (They
tend to be more range-bound in the Asian session from around 7pm EST to 2am EST).
Currency Futures Recommendations
1. Who trades currency futures?
Currency futures trade on the Chicago Mercantile Exchange (CME — www.cmegroup.
com). According to the CME exchange, some of their preferred brokers are: PFG Best
(www.pfgbest.com), MF Global (www.mfglobalfutures.com), E*Trade (www.etrade.com),
Advantage Futures (www.advantagefutures.com) and Interactive Brokers (www.interactive-
2. Decide what type of currency futures contract you want to trade.
You can start off trading E-Micro Forex Futures or E-Mini Forex Futures. (There are stan-
dard-sized contracts but these are not recommended for beginners). The e-micro con-
tracts are smaller and could be the best place for a new currency futures trader to start.
3. Know how much currency each contract controls.
All currency futures contracts are not the same. Trading one e-micro contract of the
British pound controls 6,250 pounds. However, one e-micro contract of the Euro controls
12,500 euros. The e-micro Aussie contract controls 10,000 Aussie dollars. Meanwhile the
other three e-micro contracts (JPY, CHF and CAD) all control 10,000 dollars per contract.
So ask. Understand how much you’re trading.
4. Know when the last day is to trade the present futures contract.
For instance, most e-micro contracts have this as their last trading day: 9:16 am on the
second business day immediately preceding the third Wednesday of the contract month
(usually Monday). The Canadian dollar is the one that differs among the e-micro contracts:
9:16 am on the business day immediately preceding the third Wednesday of the contract
month (usually Tuesday).
5. Know the times that currency futures contracts can be traded.
Sundays: 5:00 pm — 4:00 pm the next day; Monday — Friday: 5:00 pm — 4:00 pm the
next day (except on Friday); Friday — closes at 4:00 pm and reopens Sunday at 5:00 pm
My colleagues and I hope these recommendations have been helpful. Throughout this
mastery course, we will be giving you more tips on how to best use currency ETFs, CDs,
options, Forex and currency futures. Best of luck in all your trades!
Sean Hyman — Editor of Currency Cross Trader and Investment Direc-
tor of World Currency Watch
With nearly 20 years experience as a stockbroker, manager, and trader, Sean
has helped thousands of investors increase the value of their portfolios in
both good and bad markets.
Sean’s background stretches over many financial instruments: stocks, op-
tions, mutual funds, ETFs and currencies. However, through the years, he has gravitated
towards the enormous profit-potential in the Forex market because it has no commissions,
it trades 24 hours a day, it has tight spreads and larger volume than any other market in
the world and deals with macro events rather than unexpected things like cooked books,
backdated stock options or CEO fraud.
Currently, Sean is the Investment Director of World Currency Watch where he contributes
to The Sovereign Society’s daily e-letter, The Sovereign Investor and acts as the portfolio
manager for the monthly newsletter Currency Capitalist.
Additionally, he is the editor of Currency Cross Trader, a high-end advisory service where
he show’s his subscribers how to make consistent profits using currency “crosses.”
Evaldo Albuquerque — Editor of Exotic FX Alert and Emerging Market
Specialist for World Currency Watch
As a key player on the World Currency Watch team, Evaldo serves as a head
researcher and emerging market analyst for the Currency Capitalist monthly
A recent MBA, he formerly, served in the wealth management solutions de-
partment in a leading Brazilian bank.
Today, he specializes in finding those same, wealth solutions, for our currency readers. A
native Brazilian, Evaldo has always had a taste for emerging markets. He now spends his
days uncovering currency opportunities in emerging markets around the globe as lead edi-
tor for our high-end exotic Forex trading service Exotic FX Alert.
Exotic FX Alert provides insight and analysis to help subscribers navigate the waters
in the world of emerging market currencies of countries like Poland, the Czech Republic,
Thailand, Mexico and South Africa, just to name a few.
Kat Von Rohr — Managing Editor of World Currency Watch
For the last five years, Kat has been a key member of the World Currency
Watch team. By closely following the trends, markets, and policies that in-
fluence global currency movements, Kat has helped the Currency Capitalist
research team find numerous winning positions.
In addition to her work with Currency Capitalist, Kat also serves as Managing Editor for
the World Currency Watch team. Currency Capitalist members hear from her every month,
in their alerts, in the World Currency Watch Weekly, special investment alerts, and other
Barry Nobel — Vice President NASDAQ OMX PHLX
With over 26 years experience trading equities, equity options, fixed income
and currencies, few experts have made themselves and their clients money
like Barry has.
Today, he serves as Vice President of the NASDAQ OMX PHLX where he
works with a small team, managing the NASDAQ options exchange and is
responsible for managing education, product marketing, member and customer relation-
ships. He assists in developing strategy for equity options, Sector Index Options and
World Currency Options products as well.